Transparent spinel with high real in-line transmittance (RIT up to 79%) was prepared from commercial spinel powder by capsule-free hot isostatic pressing (HIP). Optimal pre-sintering conditions were found in order to enhance the RIT values and doping with Cr3+ (0.01–0.04 at%) and Tb3+ (0.05–0.125 at%) secured photoluminescence. The incorporation of the dopants in tested range does not noticeably reduced the RIT. The Cr3+-doped MgAl2O4 shows efficient narrow red emission at about 685 nm (R-line) due to the 2Eg→4A2g transition of Cr3+ ions located in octahedral sites of D3d local symmetry with a strong crystal field. The Tb3+-doped MgAl2O4 ceramics have shown emissions from blue to red spectral range (5D4→7F3–6 transitions), with prominent green emission centered at 545 nm. The maximal emission intensity was achieved at 0.075 at% of Tb3+, Further increase of Tb3+ content led to the concentration quenching caused by Tb3+ ions segregation at the grain boundaries.